Health Care Systems in Transition
Russian Federation
World Health Organization Regional Office for Europe
Copenhagen 1998
CARE 04 03 06
Target 36.01.01
Keywords
DELIVERY OF HEALTH CARE EVALUATION STUDIES FINANCING, HEALTH HEALTH CARE REFORM
HEALTH SYSTEMS PLANS – organization and administration RUSSIAN FEDERATION
©World Health Organization 1998
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World Health Organization Regional Office for Europe
Copenhagen 1998
CONTENTS
FOREWORD... IV FOREWORD...V
ACKNOWLEDGEMENTS... 6
INTRODUCTION AND HISTORICAL BACKGROUND... 7
INTRODUCTORY OVERVIEW AND HISTORICAL BACKGROUND... 7
Political Transition and Health Status... 7
Political Transition and the Economic Impact on Health Status ... 9
Health System Reform: A Response to the Challenges of Political Transition ... 10
Historical Background ... 12
ORGANIZATIONAL STRUCTURE AND MANAGEMENT ... 15
ORGANIZATIONAL STRUCTURE OF THE HEALTH CARE SYSTEM... 15
PLANNING,REGULATION AND MANAGEMENT... 20
Planning ... 20
Regulation ... 23
Management... 25
Decentralization of the health care system ... 27
HEALTH CARE FINANCE AND EXPENDITURE ... 30
MAIN SYSTEM OF FINANCE AND COVERAGE... 30
HEALTH CARE BENEFITS AND RATIONING... 33
COMPLEMENTARY SOURCES OF FINANCE... 36
Out-of-pocket payments ... 37
Voluntary health insurance ... 38
External sources of funding... 39
HEALTH CARE EXPENDITURE... 41
Structure of health care expenditures ... 45
HEALTH CARE DELIVERY SYSTEM ... 47
Structure of the soviet health care system ... 47
PRIMARY HEALTH CARE AND PUBLIC HEALTH SERVICES... 49
Public health services... 52
SECONDARY AND TERTIARY CARE... 54
SOCIAL CARE... 61
HUMAN RESOURCES AND TRAINING... 62
PHARMACEUTICALS AND HEALTH CARE TECHNOLOGY ASSESSMENT... 68
FINANCIAL RESOURCE ALLOCATION... 70
THIRD-PARTY BUDGET SETTING AND RESOURCE ALLOCATION... 71
PAYMENT OF HOSPITALS... 73
PAYMENT OF PHYSICIANS... 76
HEALTH CARE REFORMS ... 78
DETERMINANTS AND OBJECTIVES... 78
CONTENT OF REFORMS AND LEGISLATION... 80
Health for all policy ... 81
REFORM IMPLEMENTATION... 82
CONCLUSIONS ... 84
REFERENCES... 85
Sources in addition to those listed in the footnotes only ... 85
Foreword
The Health Care Systems in Transition (HiT) profiles are country-based documents that provide an analytical description of the health care system and of any reform programmes under development. HiTs form the basis of the information system on health care systems and reforms at the World Health Organization Regional Office for Europe (WHO/Europe).
The aim of the HiT initiative is to provide relevant comparative information to support the development of health care systems and reforms in countries in the European Region of WHO.
This initiative has four main objectives:
• to learn about different approaches to financing, organization and delivery of health care services in the European Region of WHO;
• to describe the process and content of health care reform programmes and to monitor their implementation;
• to highlight common challenges and areas that require more in-depth analysis and which could benefit in particular from cooperation and exchange of experiences between countries;
• to provide a tool for dissemination and exchange of information on health care systems and reform strategies between different countries in the WHO European Region.
The HiT profiles are produced by country experts in collaboration with staff in WHO/Europe’s Health Systems Analysis programme. In order to maximize comparability between countries, a standard template and a questionnaire have been developed. These provide detailed guidelines and specific questions, definitions and examples to assist in the process of developing the HiT profile. Quantitative data on health services are based on the WHO/Europe health for all database, OECD health data and World Bank data.
Compiling the HiT profiles poses a number of methodological problems. In many countries, there is relatively little information available on health care systems and the impact of health reforms.
Most of the information in the HiTs is based on material submitted by individual experts in the respective countries. As a result, some statements and judgements may be coloured by personal interpretation. In addition, the wide diversity of systems in the WHO European Region means that there are inevitably large differences in understanding and terminology. As far as possible, these have been addressed by the development of a set of definitions, but some differences may remain. These caveats are not limited to the HiT profiles, however, but apply to most attempts to study health care systems.
The HiT profiles are a source of descriptive, up-to-date and comparative information on health care systems, which should enable policy-makers to identify key experiences relevant to their own national situation. They constitute a comprehensive source of information which can form the basis for more in-depth comparative analysis of reforms. The current series of HiT profiles covers over half of the countries in the European Region. This is an ongoing initiative with plans to extend coverage to all countries in the Region, to update the material at regular intervals and to monitor reforms over the longer term.
World Health Organization Regional Office for Europe Department of Health Policy and Services
Health Systems Analysis Unit
Acknowledgements
The current series of the Health Care Systems in Transition profiles has been prepared by a team led by Josep Figueras and comprising Tom Marshall, Martin McKee, Suszy Lessof, Ellie Tragakes (regional editors) and Phyllis Dahl (administrative support, data analysis and production) in the Health Systems Analysis programme, Department of Health Policy and Services, WHO Regional Office for Europe.
Data on health services were extracted from the WHO/Europe health for all database. Special thanks are extended to OECD for the data on health services in western European countries, and to the World Bank for the data on health expenditure in central and eastern European (CEE) countries.
The HiT on Russian Federation was written by Suszy Lessof and Valery Tchernjavski and edited by Suszy Lessof.
Introduction and
historical background
Introductory overview and historical background
Political Transition and Health Status
The Russian Federation has a population of 147.9 million people (1995), 72.9% living in urban areas. It covers 17.08 million square kilometres and is enormously diverse with 75 distinct nationalities, numerous ethnic groups, languages and religions. All health matters on Russian territory; of health status; of health care organization; and of health system financing; have been profoundly affected by the break-up of the former Soviet Union and the creation of the Federation. A highly centralized, command economy has been replaced by an increasingly loose grouping of states and all those areas of certainty, guaranteed by the Soviet monolith are now open to negotiation. Russian health services are no exception and against a background of economic and political turmoil, planners and providers are struggling to adapt structures and regulations to a new and uncertain environment.
The central health related achievements of the Soviet Union; the provision of universal coverage and equitable access to health care; belied the fact that health status was poor in comparison with other industrialized nations. The last thirty years of Soviet power saw the population of the former socialist economy fall further behind their western counterparts in a number of key indicators. However, the uneven decline in life expectancy experienced over an extended period pales into insignificance besides the current magnitude of the increase in mortality rates.
There has been a dramatic rise in mortality, which is both unprecedented in a twentieth century industrial nation and exceptionally costly in human terms. Since 1990 Russian male life expectancy at birth has declined by seven years and in 1994 was 57.3, on a par with Pakistan1. Female life expectancy has been less profoundly affected but across the population as a whole 1 000 000 extra Russian deaths have occurred since the creation of the Russian Federation, which would not have occurred had the age and sex specific death rates for 1991 been maintained2. While death rates now appear to have stabilized, the gap with the West remains catastrophic and a possible block to the reform process.
The main causes of death are diseases of the cardiovascular system; neoplasms; trauma and poisoning (external causes) and diseases of the respiratory tract. Against a background of wide regional variations, national averages for mortality increased for cardiovascular disease by 7.5%; for neoplasms by 7.3%; for external causes by 191.2% and for respiratory tract diseases by 1%. When reviewed in terms of number of years of life lost the figures for external causes
1 D Leon, L Chenet, V Shkolnikov, S Zakharov, J Shapiro, G Rachmanova, S Vassin, M.McKee: Huge Variations in Russian Mortality Rates, 1984-94, Artefact, Alcohol or What?, Lancet Vol 350 pp303-388
2ibid
are particularly worrying since trauma and accidents primarily affect younger and middle aged adults3.
Data on morbidity is less reliable due to a shift from recording prevalence to recording incidence only. However, there has been a fall in number of days work lost through illness over the last few years which might suggest a fall in general morbidity. This picture is confused by the large number of ‘lay-offs’ over the same period and the increasing employment insecurity which may have led people to minimize days of sick leave taken. Certainly there has been a resurgence in particular infectious diseases, at least in part due to a breakdown in the supply of drugs for immunization/vaccination programmes and treatment. Again there are wide regional variations but cases of diphtheria, tuberculosis and whooping cough have all risen4.
Broader environmental health factors are also problematic with the historical tendency of industry to pollute likely to increase as central regulation and enforcement of health and safety standards break down.
As worrying is the health behaviour of Russian citizens and the decline in wider health indicators which suggest a long-term picture of raised morbidity and mortality figures. Alcohol and cigarette consumption are high and nutritional status poor which bodes ill for the future.
The Russian Longitudinal Monitoring Survey5 tracked health indicators from September 1993 to December 1994 and revealed a 136% increase in the male consumption of alcohol in grams6 and a 71% increase in females7 although the proportion of the population abstaining from drink increased slightly over the same period. Male smoking remains high but constant at just below 60%8 while female smoking showed a 25% prevalence increase over the same period9. However, many of the new, female smokers appear not to smoke heavily as the mean number of cigarettes consumed by women has decreased.
Dietary patterns are problematic with a continued reliance on high levels of energy intake from fat despite a slight decline over the period of the survey. Children derived 32–36% of total calories from fat, adults of 18–59, 34–38% and the elderly (60 and over), 30–36% compared with recommended levels of 30%10. Protein intake has remained largely constant and the shift therefore, has been to carbohydrates or alcohol. Nutritional status, as reflected by the body mass index, demonstrated that the adult population while predominantly within normal ranges from 18–29 years, show increased levels of both overweight and obesity in the 30–59 years group and particularly high levels over sixty. 36.8% of 30-59 year olds were overweight in December 1994 and 20.7% were obese, while 37.7% of the elderly were overweight and 27%
obese at the same point. The survey demonstrated that rather than the problems of underweight, which were widely held to affect the elderly, obesity posed a greater threat to health and was increasing11.
Children’s nutritional status is more worrying with an increase in the prevalence of stunting; an indicator of chronic malnutrition; among children of two and under. This problem appears to have doubled between September 1992 and August 1993 and to remain high. At the outset of the survey 6.9% of infants from 0–24 months were stunted compared to 12.8% in December 1994. Children from 25 months to 6 years old showed less evidence of an increase in stunting although levels were higher at the outset with 9% falling into this category in 1992 and 10.4%
in 1994. Other child health indicators are as distressing with up to 12% of the country’s
3 Source: Data of the Ministry of Health of Russia, 1993
4ibid
5 Monitoring Health Conditions in the Russian Federation - The Russia Longitudinal Monitoring Survey 1992-4 March 1995 University Of North Carolina at Chapel Hill
6 From 27.7 g to 65.5g
7 From 8.7g-14.9g
8 Male smoking shows a very slight decline from 59.8% in Sept 1992 to 59.4% in Dec 1994
9 From 7.5% to 9.4%
10 Problems in defining terminology mean these figures should be treated with caution.
11 Only 1.8% of the elderly (60+) were underweight at the start and finish of this survey period.
classified invalids being children. Definitions of ill health are unclear but a State Report12 estimated that the health condition of 53% of primary school children had deteriorated and that only 20-25% of all children completing the primary education cycle and only 3-4% of secondary school graduates (in St. Petersburg) were ‘healthy’. Other estimates suggest that by the year 2000 some 60% of all school children will be suffering from at least one chronic disease13. The fact that these fears are articulated at all is telling.
Morbidity of newborns also gives cause for profound concern, estimates vary but it is believed that at birth up to 20% have some disability and that only 35% are ‘fully healthy’. Projections suggest that by the year 2000 no more than 15% of newborns will meet criteria for full fitness.
Infant mortality is also high with 18 deaths per 1000 deliveries in 1992 and up to 20/1000 in 1993. Figures may be falling again as the issues in the most seriously affected regions are addressed.
Women’s health, while it has been less affected in terms of mortality, is also severely compromised, particularly in relation to reproductive health. Maternal death rates are 51.6 per 100,000 live births (1993)14, five to ten times international levels, with particularly high rural rates. A high percentage of maternal deaths are due to abortion complications (29.4%), haemorrhagia (13.8%) and toxaemia (12%) of which 60% are believed to be avoidable15. Access to birth control is still a major issue and abortion, following clandestine traditions established during the pro-natalist policy of the Stalinist era, remains the major form of contraception. Again statistics are problematic due to shifting definitions but Russia appears to lead the world in terminations with 224.6216 induced abortions per 100 live births in 199217. The maternal mortality data demonstrates that these figures alone constitute a major health risk, on top of which estimates suggests that complications adversely effect 40% of surviving women. Use of the pill and intrauterine devices is particularly low with marked regional variations (13-46.2/1000 and 66.7–278.3/1000 respectively18). Overall only 18% of Russian women use contraception.
Political Transition and the Economic Impact on Health Status
The above suggests profound problems in the long-term burden of disease in the Russian Federation. Poverty clearly plays a significant role in the situation and the growing economic uncertainties can only exacerbate the current difficulties. Lack of indexation and poor data give an inaccurate picture of change but immediately after the Russian Federation was established there was rampant inflation and a profound erosion of personal income followed by what appears to have been a relative ‘boom’ during 1994. This in turn has been succeeded by a second wave of inflation and a fall in real wages. It is commonplace for employers to be unable to meet wages bills and the practice of paying salaries two to three months in arrears is widespread. There are also considerable seasonal fluctuation in employment and income patterns, with variations of up to 15-22% in monthly income19. Indebtedness (of employers to employees) remains high in 1996 despite which population expenditure patterns are relatively constant20 although personal savings are likely to fall.
12 The State Report on Population Health in the Russian Federation in 1991 (Office of the President of the Russian Federation 1992)
13 Russia; Dr V.E.Tchernjavsky in International Handbook of Public Health ed K. Hurrelmann and U. Laaser, Greenwood Press, 1996
14 Vital and Health Statistics; Russian Federation and United States, Selected Years 1980-1993, National Centre for Health Statistics, Vital Health Statistics 5 (9), 1995
15 Russia; Dr V. E. Tchernjavsky op cit
16 Excludes illegal and some commercial abortions.
17 Offical data of the Ministry of Health of Russia, 1993
18 Andrej A Popov, Family Planning and Induced Abortion In the Post Soviet Russia of the Early 1990’s: the Unmet Needs in Information Supply, Moscow, 1994
19 I. Kolosnytsin, Income of Natural Persons; Russian Economy: Trends and Perspectives, February 1996
20 I. Kolosnitsyn, Incomes of Population; Russian Economy: Trends and Perspectives, March 1996
Differentiation of income, which escalated enormously in the aftermath of federation, has now slowed with the labour payment ‘gap’ having stabilized to a significant extent. The role of
‘social transfers’, i.e. state retirement or disability pensions, has become increasingly important as a share of personal income and may amount to as much as 60% of the total. The adjustment of pension indexation has done much to ensure that compensation levels have remained constant, thus protecting the more vulnerable sub-groups of the population.
Notwithstanding, the pace of economic and political change has been uneven with enormous variability in the rates and types of change in different oblasts over time. Bouts of rapid inflation have particularly affected old people and children dependent on state support. Despite expectations that the elderly living alone would suffer from greater extremes of poverty, it has been shown that it is the elderly living in households with other adults under the age of 60 and with children who are most at risk. 16.8% of the elderly living in extended households had an income of less than 50% of the official poverty line in contrast to 7.9% of the elderly living alone in December 199421. However, these figures were a substantial increase on September 1992 which suggests that poverty is a growing threat to the health status of the elderly.
There has also been a marked shift in the distribution of poverty overall from the elderly to children, the working poor and the unemployed during this period22. 40% of children in 1992 and over 46% in 1993 were poor, almost double the rates of the elderly while in December 1994, 60.7% of pre-school children were ‘poor’ in contrast to 27.6% of the elderly. The suggestion is that the population over 60 are protected to some extent by their access to plots of land for the cultivation of food stuffs and to charitable donations, resources unavailable to families with children.
Real income cuts, the reduction in family income linked to the increase in part-time working23 and the stress associated with economic instability may all be expected to worsen health indicators in the Russian Federation. Furthermore, the economic condition of the country threatens the sustainability of the health care delivery system.
Industrial output and gross national product have declined dramatically exerting enormous pressure on health budgets while the increasing autonomy of the various republics and regions have seen the reemergence of inequalities across the country. Federal reserves are low and the government assets in the form of nationalized enterprises have been sold off in a headlong rush, in part to fund current expenditure. There has been little attempt to foster strategic investment or to develop the structure of industry long term24, which raises concerns about long term economic stability. The depletion of state holdings also reduces the government’s scope to generate additional funds in the future. Privatization has now slowed but only after what may prove to have been a damaging episode to the fiscal standing of the state25. Since health care funds depend on wider economic performance this situation prompts concerns about the long term future of the health system.
Health System Reform: A Response to the Challenges of Political Transition
TheSoviet system, despite its many and profound flaws, represented a very real achievement.
It provided a basis for community health activities including mandatory immunization and periodic health checks and fostered a generation committed to solidarity in health care provision. Despite the enormous challenges facing the country, the belief in a health care system centered on need rather than ability to pay remains intact. There is though, a growing awareness of the necessity of increased efficiency and a real desire to enhance user satisfaction.
21 B.M.Popkin, N.Zohoori; Elderly Nutrition In Russia : Is There a Public Health Problem; April 1995
22 T. Mroz, B.Popkin; Poverty and the Economic Transition in the Russian Federation; EconDevelCult Change, 1994
23 S.Smirnov, Incomplete Employment Gives No Reason for Anxiety;Russian Economy: Trends and Perspectives, February 1996
24 A.Radygin, Privitization; Russian Economy: Trends and Perspectives, January 1996
25G. Malginov, Small Scale Privatization in 1995; Russian Economy: Trends and Perspectives, Feb 1996
These concerns coupled with a recognition of the need to address issues of sustainability have prompted a major reform of the health system centered around financing mechanisms. Funding which was previously from general taxation has shifted in part to a social insurance system and it is this shift which provides the background for the health reform process of the Russian Federation.
Historical Background
The Rus civilization (a precursor of both the Russian and Ukrainian nations) emerged during the 8th and 9th centuries along the northern Volga River, with Novgorod as its center of gravity, and expanded southward to Kiev reaching the Byzantine Empire. Other principalities eventually arose, including Tver, Vladimir and Muscovy (Moscow). The area came under Mongolian control from the 12th until the late 15th century when Muscovy, having achieved prominence, gained liberation from Mongolia and reunited the subjugated principalities in a Russian state. Under Tsar Peter I (1689 - 1725) Russia underwent a number of "western"
reforms, appropriated the Baltic provinces and territories to the south and east, and was proclaimed an empire (1721). Following the defeat of Napoleon (1812-13), Russia was recognized as a great power, though it remained an autocratic state with a primarily agrarian economy based on feudal serfdom. Serfdom was not abolished until 1861.
By the end of the 19th century, industrialization was underway in a number of cities and was associated with increased urbanization and a growing proletariat. Health care provision was patchy but there were some attempts at offering Bismarkian style health insurance in urban areas while the local government Zemstvo system provided a degree of coverage in rural settings. The State tended to foster initiatives focused on public health, sanitation and the control of infectious diseases rather than care delivery. Poor economic conditions contributed to strikes and riots in 1905, which led Tsar Nicholas II to initiate some constitutional reforms.
In early 1917, following the catastrophic conduct of the First World War, the 300 year old Romanov dynasty was overthrown, giving way to constitutional monarchy and a tentative parliamentary democracy. In October/November of the same year the government was seized by the Bolsheviks. A civil war ensued (1918-1920) and the Union of Soviet Socialist Republics was formed (1922), in which Russia became the dominant force. The experience of the civil war and the subsequent famine were devastating in health terms with much of the existing infra-structure destroyed and a long term health burden created. The Second World War (1941- 194526) following, as it did so soon after the establishment of the Soviet Union was catastrophic. Again the emerging health infrastructure was devastated and, quite apart from the enormous loss of life incurred, a generation with severely compromised health was created.
The post-war governments of the Soviet Union were influenced both by the experience of epidemics consequent on war and famine and by their political belief in the preeminence of the worker. They tended to focus activities both on the control of infectious diseases and the delivery of health care through the place of work. There was also a strong pro-natalist bias and an emphasis on maternal and child health, prompted in part by Russian traditions and in part, by a sense of nation building. The Semashko system dominated the national conception of public health and led to extensive epidemiological monitoring networks, a focus on ‘sanitary’ medicine and the institution of systematic checks on the health of children and workers. A network of rehabilitation and recuperation centers were fully resourced and were regarded as an essential corollary to standard provision.
The focus on infectious diseases led not only to extensive preventive measures, but also to the creation of an enormous bed capacity which allowed for the isolation of infectious cases. The epidemiological shift of the 1960s saw the government unprepared to respond both psychologically and in terms of capacity27. There was a reluctance to accept the growing impact of non-communicable diseases and an institutional inability to re-gear the health system. Rather governments chose to suppress data and to create yet more beds. The Brezhnev era saw annual health checks extended to the entire population. This ‘dispensarizate’ was largely unfunded, overstretched the primary care system and prompted the creation of still more bed spaces.
26 The USSR entered the war later than much of the rest of Europe
27 Dr Elena Varavikova - work in progress.
The consequence of these preoccupations can still be felt in the post-Soviet health system. The facilities for rehabilitation remain, as does a marked over provision of beds. The tendency to carry out mass screening with little thought as to how any needs detected will be met, has also persisted. A further legacy of the state’s past attitudes is the undervaluing of medical staff. The Soviet era held doctors and nurses to be part of the non-productive sector of society and consequently deprioritized their pay and conditions. The fact that the bulk of doctors were women tended to exacerbate this situation. This has left a long standing tradition of underpayment of medical staff relative to industrial workers.
From the mid-1980s Soviet hegemony began to wane and a liberalization of central planning in the form of perestroika (restructuring) and glasnost (openness) allowed for experimentation in health care organization. The Kemorovo and Leningrad models (launched in 1988) did much to inform recent policy changes. They were intended to allow health system managers greater flexibility and control of resources which, it was hoped, would lead to greater responsiveness to patient needs and ultimately to a stronger focus on primary care. The Kemorovo28 scheme saw per capita funding for the local population placed in the hands of polyclinics who acted as purchasers of care for their patient ‘list’. Polyclinic budgets included an allowance for diagnostic tests, hospital referrals, care and emergency services. Hospitals were contracted to provide care, on a case-payment basis, often by autonomous groups of general practitioners within polyclinics, constituted as free-standing, secondary fund-holding teams. Hospitals also established autonomous teams with their own clinical budgets. Institutions were free to hire staff, negotiate pay and sell care to private patients, retaining income for reinvestment or bonuses. Practice and quality were monitored on agreed ‘medico-economic’ standards or protocols to ensure against the risk of under-treatment as a cost saving measure.
In early 1992, Kemorovo piloted a compulsory health insurance programme through the
‘Kuzbass’ or sickness fund. The Kuzbass collects income related contributions from employers and subsidies from the local authorities and distributes them to local branches who compete with commercial insurers. 20% of the market is private and complex regulations guard against risk selection and ensure an equitable redistribution of funds across the region. It is interesting to note, in light of the national insurance premium agreed subsequently, that payroll contributions in Kemorovo were set at just over 10%.
The St. Petersburg model29 took a similar approach devolving purchasing decisions to groups of practitioners. A group practice system was set up in parts of the city with each unit consisting of three generalists, two paediatricians and a gynecologist and covering a population of 8,000. Per capita payments were made to include a broad package of outpatient care and those para-clinical services offered within polyclinics. All relationships between teams were governed by contract with providers themselves contracted either to the clinic or the Territorial Management Association (TMA). The TMA was made up of local providers and held collective responsibility for the volume and quality of care. Performance related compensation was introduced at the group practice level with a weighted ranking system based on specific indicators i.e. days disability, delayed diagnosis, vaccination levels, complications, complaints etc. forming the basis for a cross sectional comparison of group performance. Bonuses were paid on this weighted measure of medical outcomes, which however, lacked a formal control component for quality of care.
The belief that the ability to retain savings made at the primary level would encourage a reduction in the tendency to over-refer to specialists was borne out in practice. In the first four years of the Kemorovo pilot bed numbers were reduced by 1,500 while admissions in St.
Petersburg fell by 5% in two years (from 846,500 in 1988 to 804,700 in 1989). Efficiency savings were also made, with the average length of stay in St. Petersburg falling from 17 to 19 days over the same period. 2,500 beds were deemed to have become redundant some of which were converted to long term nursing care. Some restructuring of secondary care was also
28 Kemerovo is an industrial/mining oblast in south west Siberia with a population of 3.5 million.
29 St Petersburg has a population of five million and is served by numerous polyclinincs, 100 hospitals, 29 research centres and four medical education institutes all participating in the experimental scheme.
evident following the assumption of a greater part of the burden of care in the primary setting.
Paediatric, trauma, and general surgical beds fell while there was an increase in capacity in specialized areas like oncology and orology.
Efficiency savings were made and in Kemorovo were invested in management information systems and public health/management training. In St. Petersburg funds were released for the purchase of new diagnostic and treatment facilities and staff benefits. While the pilot approaches created incentives for effective primary care and a more efficient utilization of secondary and tertiary medicine there was also evidence of a tendency to restrict hospital admissions from financial rather than clinical motives. Some of the benefits of the schemes also seems to have fallen away as the economic situation has worsened, raising doubts about sustainability. Nonetheless these models have been enormously powerful in defining the scope of the current reform process.
Perestroika and glasnost led to an uncontainable pressure for change. A failed coup attempt by hard-liners in October 1991, saw all Soviet republics declare independence, and on 25 December 1991 the USSR was formally abolished. A new Russian constitution was adopted with a two-chamber Parliament replacing the Supreme Soviet. The country has continued to experience rapid change and a degree of conflict (including a further failed coup attempt in Autumn 1993). Economic pressures have been enormous and the implications for health status deeply problematic. It is against this background that health sector reform is now taking place.
Organizational structure and management
Organizational structure of the health care system
Until 1991 the health system of the Soviet Union was organized along highly centralized lines with the Supreme Soviet holding ultimate authority. Responsibility for health care provision was delegated to the Ministry of Health of the U.S.S.R which in turn oversaw Ministries of Health within the 15 Soviet Socialist Republics. Russian health care then, was subject to the supervision of the Russian Soviet Socialist Republic’s Ministry of Health, which covered more than 80% of the territory of the Soviet Union. However, it had little policy formation role and tended to carry out nationally determined supra-soviet directives. Departments within the All- Soviet Ministry included;
• Curative Health Care Services
• Maternal and Child Health Care
• Medical and Nursing Education
• Sanitary Epidemiological Services and
• Sanatoria and Resorts.
The Ministry also directly supervised special, all soviet health services and institutions (largely highly specialized and research oriented) and oversaw the All-Soviet Quarantine Institute and the USSR Academy of Medical Sciences which in turn regulated individual national Research Institutes.
This structure was broadly replicated within Ministries at the Republican level. The Russian Ministry, through the agency of its various departments, provided both special Republican health services and institutions, again with a tertiary and research focus, and supervised regular health services. These republican organizations included medical educational institutes and research centers (some with beds and clinics); specialist republican hospitals and polyclinics (out-patient centers); nursing schools and sanatoria. The republican administration also directly controlled oblast San-Epid stations responsible for monitoring infectious disease, environmental hazards etc. and oblast nursing schools.
The regular health service delivery was mediated through a series of local government structures all incorporated within the formal local government organization, which provided accountability through the elected nature of local assemblies. City health authorities managed city hospitals and polyclinics for adults, women and children. Regional Oblast, Autonomous Republic or Krai governments provided both tertiary and secondary hospitals, and out-patient services at a ‘state’ level and monitored rayon bodies, the next tier of administration down.
Rayons oversaw smaller territories or districts and provided a central hospital and out-patient services (polyclinics). There were further rural councils providing uchastok hospitals and in remote areas either doctor led ambulatory clinics or feldsher-midwife stations.
In November 1991, the All-Union Ministry of Health ceased to exist, and was re- established as the new Ministry of Health and Medical Industry of the Russian Federation. This involved what
was in effect a merger of both the all-Soviet ministry and the Russian republican ministry.
While there were was a degree of conflict over the relative responsibilities of the two hierarchies the similarities in structure allowed for a relatively smooth incorporation of the two bodies. Sanitary and epidemiological services were upgraded and constituted as the State Committee of Sanitary Epidemiological Surveillance. This new quasi-autonomous status included responsibility for the Federal Quarantine Institution, regional Centers for Sanitary- Epidemiological Surveillance and some Epidemiological Institutions, and was the only major change in ministerial structure. It was intended to insure the independence of health services monitoring and to highlight the health status trends identified. In addition in 1991 the Academy of Medical Sciences of USSR responsible for medical research was re-established as a Russian Academy of Medical Sciences and made independent.
1993 saw the establishment of a mandatory health insurance system (detailed elsewhere) and with it the separation out of may of the funding responsibilities of the Ministry of Health. These are now located within the health insurance system under the supervision of the Federal Mandatory Health Insurance Fund (FMHIF). The Ministry of Health retains oversight of this fund’s administration and governance although the Fund has its own Executive Board reviewing performance and policy. The FMHIF regulates the operation of Territorial Mandatory Health Insurance Funds (TMHIF) that are congruent to existing oblasts. These in turn may supervise Branch Health Insurance Funds (BHIF) that are acting, in the short term as insurers of the local population. However, in the long term TMHIFs are expected to contract with private insurance companies who will be the main purchasers of care.
In August 1996, Sanitary-Epidemiological Surveillance was reintegrated into the Ministry as a department and responsibility for Medical Industry (private and state owned) reverted to the trade and industry sector. Attempts to integrate the Ministry for Social Protection into the health protection system have been abandoned and it has been absorbed into the Ministry of Labour. The organizational structure of the health system is as detailed below;
Figure 1 Organizational chart: admin. structure of the statutory health system [see Russian Federation -Health Care System 1993 on - (Mikko on disc) to update (1996 on) to show San-Epid reintegrated into MoH; also to delete MoSocial Protection which is now part of MoLabour and to drop Industry from the title as this has reverted to trade & ind]
The Ministry of Health is the highest administrative level, headed by a minister appointed by Parliament. It continues to be the central policy formulating body for the Russian Federation and retains nominal rights to oversee the work and decisions devolved to the regions. However, the level of power enjoyed by the oblasts has grown substantially, particularly in budget setting and the Ministry no longer expects to command compliance to all central directives. Medical and nursing education continue to be within its scope, as is disaster and relief management and epidemiological monitoring at a national level is once more within its remit. Its official responsibilities, carried out together with the San-Epid network of health centers include:
• state policy in health care;
• federal health programmes, including initiatives on diabetes, tuberculosis, health promotion, health education, disease prevention and forensic medicine;
• management of Federal medical establishments;
• quality assurance;
• professional undergraduate and postgraduate training in medicine and nursing;
• major capital investments in the health care system (buildings and equipment);
• epidemiological and environmental health monitoring and health statistics ;
• developing methodologies for health planning, workforce planning and policy
• the control of drugs and food additives;
• disaster relief.
The Role of Other Ministries in the Health System as in all countries the Ministry of Finance has a significant role in health care in that it determines levels of funding available.
However, even in the Soviet era, direct central government allocations (as opposed to locally levied taxes) are believed to have accounted for no more than 3% of finances and the economic pressures on the Ministry of Finance make any advance on this figure unlikely. The Ministry continues to formulate national budgets and to recommend spending levels for local government. In addition surveillance, programmes for particular disease groups and certain types of capital expenditure are financed from federal sources.
The Ministry for Social Protection, which was established to protect the interests of the most vulnerable and worked closely with the Ministry of Health, has now been reabsorbed into the Ministry of Labour, which will take on responsibility for social care and (in conjunction with Ministries of Trade/Industry) for health and safety practices.
The Role of Other Ministries and Public Enterprises as Providers of Health Care; as in many former socialist economies Ministries often run their own parallel health services. The Ministries of Defence, the Interior and of Transport all have polyclinic and hospital networks.
In total over 20 Ministries provide health care directly although as structures change periodically it is difficult to give exact figures. In addition, large public enterprises continue to house health care providers and to subsidize their activities. Again it is difficult to estimate exact levels as industry is in a state of flux and firms under pressure to make profits are likely to divest themselves of health care provision. The level of funding provided through these routes is also unclear since data is not collected centrally.
Statutory Bodies; The Oblast, Autonomous or Krai Health Departments; govern regional health care. Although they no longer handle all health sector funds they are expected to finance up to 60% of costs and so retain a significant role. They report to the Russian Ministry of Health on narrow medical issues and ensure compliance with federal programmes, in particular those focused on the control of conditions and infectious diseases defined as of high social priority. Otherwise they enjoy considerable autonomy within their administrative units. Some Health Departments are clearly heavily involved in setting reform agendas, monitoring quality etc. while others have abrogated many of their responsibilities to TMHIFs and serve only as final arbiters in local disputes.
Statutory Bodies; Rayons; at a local level District Health Authorities or Rayons (DHAs) take on the executive role although again there is enormous variation in how this remit is interpreted. In many larger cities rayon authorities appear to be actively engaged in the reform process while in rural areas, the functions of health authorities have tended to become the responsibility of heads of central district hospitals.
Statutory Bodies; The Federal, Territorial and Branch Mandatory Health Insurance Funds; are responsible for the collection and allocation of the earmarked social insurance contribution. The Federal fund deducts 0.2% from the payroll contribution in order to allow for the equalization of resources across regions. It is also charged with oversight of the TMHIFs and their activities and with a policy setting role. There are 82 TMHIFs which act in lieu of DHAs in managing regional health budgets and appointing insurance companies to purchase care for local populations. It is the role of the TMHIF to monitor the activity of the companies, ensure quality of care and to encourage competition between third party payers. TMHIFs are also guarantors of care for the entire population and are obliged to make provision for those citizens failing to arrange their own insurance. In those regions which are as yet unable to support a free-standing insurance company, TMHIFs are empowered to establish Branch Funds which act as short term insurers. In this instance BHIFs enter into contracts with providers to purchase care.
Insurance Organizations; the 1993 reform of the system involved the creation of independent third party payers i.e. insurance companies who are charged with purchasing health care on behalf of local populations. Insurance companies play a role more closely aligned with the
Organization and Management of Care Consumption model30 (OMCC) than of insurers per se.
They are obliged to cover all members of a local population and frequently have little choice as to care providers. Their position as regards the bearing of risk has still to be clarified but early experience suggests that it is the TMHIF rather than the companies themselves who absorb losses resulting from activity levels in excess of budget provision. Insurance companies tend to be private, joint-stock organizations and to negotiate contracts with providers on a case payment rather than a per capita basis. Their role was to include monitoring of utilization and quality and they were expected to encourage a shift of emphasis to both primary care and preventive measures. It is too early to judge their success to date but their evolution has not been entirely as expected.
The Private Sector; private provision, while legally permissible, has yet to develop to a significant extent. Hospitals are entitled to charge for services not included in the basic package but it appears that this generates no more than 5% of income. It also appears that the majority of paid services are commissioned under voluntary insurance schemes managed by private insurers, rather than by individuals. The ‘closed’ clinics and hospitals of the Soviet era i.e.
those state institutions that catered to the nomenklatura and were not generally accessible, absorb most of such private care provision.
Ownership of hospitals, however, remains almost exclusively in the public sector. Legal uncertainty around the security of leases purchased form the state have discouraged a wholesale shift to private ownership31. The option of creating not-for-profit or ‘trust’ status hospitals is also problematic with considerable uncertainty around the tax position of charitable institutions and general hostility from statal bodies to the encroachment of non-governmental organizations into their traditional spheres of activity32.
It is only in pharmaceutical supply that private provision is fully established although dentistry and opthalmology follow closely behind in developing a commercial sector. Out-patient drugs are not covered by the basic package and must be bought from pharmacies, which were among the first wave of enterprises to be privatized. All but the most basic dental services are available on a fee-for service basis only and the provision of dentures and other prostheses are largely through the private sector.
Professional Groups; the Soviet Union had a wide range of scientific and professional associations but they never established a tradition of genuine independence. The creation of the Russian Federation has seen the emergence of more autonomous groupings, although the number of competing organizations in existence at independence has frustrated the emergence of clear professional leadership. The Russian Medical Association is however, beginning to voice a distinct and united professional view on medical and health policy issues. Nurses and midwives have proved less successful in articulating or securing recognition for their collective views, while specialist professional groups still tend to be divided along regional lines. These limitations notwithstanding, doctors are lobbying on health legislation and are increasingly being approached by the insurance industry with a view to securing their support.
The Soviet tradition of clinicians taking on research and policy making roles persists and although policy institutes are restricted in their access to research funds33, contributions to the policy debate are normally informed by the medical experience of personnel. Similarly, it is commonplace for doctors to enter politics and the Minister of Health is always medically qualified. This secures the medical professions a certain degree of access to decision-makers and ensures a sympathetic hearing of professional concerns.
30 D. Chernichovsky and E. Potapchik; Needed Financial Mechanisms Under the Russian Health Insurance Legislation and Health System Reform, 1995
31G. Malginov; Small Scale Privitization in 1995; op cit, Feb 1996
32S.Shishkin; Non-commercial Sector of Economy Legal Area Formation; Russian Economy: Trends and Perspectives Jan 1996
33I. Dezhina; Science Sphere: Financial Crisis at the Beginning of 1996; Russian Economy: Trends and Perspectives, Feb 1996
The Voluntary Sector; the voluntary or non-governmental sector is still underdeveloped and faces hostility from many traditional, statal agencies and uncertainty around its legal position.
Charitable organizations have had a poor track record in terms of financial probity and have been open to abuse in the past. The federal laws; “On Charity Activities and Charity Organizations” (June 1995) and “On Non-Profit Organizations” (December 1995) laid down a clearer framework for the sector but ambiguity around liabilities, tax status, commercial activities and regulation persist34.
Nonetheless, non-governmental organizations have been encouraged by international agencies and although they tend not to be in a position to deliver services themselves are developing a role as advocates for particular interest groups.
While much of the structure of the Soviet health system has been retained there have been profound organizational modifications most particularly in the establishment of Federal and Territorial Mandatory Health Insurance Funds. The perceived problems of rigidity and over- centralization have been addressed but there are difficulties in the operation of the new structures and in particular in the relationships between them. Lines of communication tend to be ad hoc and there are groups of issues that fall between the sphere of responsibility of the reconstituted administrative bodies. In addition to the lack of coordination between centers of authority, it is clear that in some of the more remote regions the organizational capacity assumed by the reform process is lacking and there are lacunae in the provision of health sector authority and accountability.
The direction of future adjustments to the organizational structure is uncertain. There is a possibility that health services delivery will be more closely aligned with social protection, but under the auspices of the Ministry of Labour rather than the Ministry of Health. There are also conflicting demands from oblasts some of which would like even greater autonomy while others seek a return to a more centralized model of organization and funding. All further changes will require investment in management and administrative training if they are to translate into greater health services efficiency.
34S.Shishkin; Non-commercial Sector of Economy Legal Area Formation; op cit, Jan 1996
Planning, regulation and management
Planning, regulation and management are areas that were previously clearly delineated and subject to central control. Planning was the most highly centralised, but all three were carried out in line with policies and standards determined at the level of the Soviet Ministry of Health.
The post-1991 decentralization process however, has been so rapid and so far reaching that there are fears that there may be a breakdown of core planning and regulatory mechanisms.
Further, the strains placed on the management structures that were in place in the soviet era are such that their ability to cope is threatened. Certainly the pace of the process has compromised systemic functionality in these areas.
The range and depth of the changes taking place does much to explain these difficulties. There has been a move from an integrated model with little distinction between third party payers and providers to a contract model. There are now clear separations between provider and purchaser functions, at least in those areas that have proved able to implement key reforms. Although providers continue to be, in large part, state owned, third party payments are channelled through public insurance funds and private sector insurance company purchasers rather than through local health committees. Purchaser-provider relationships are now governed by contract shifting the burden of planning and of quality control, if not regulation, to a new and relatively untested style of organisation.
Nominally, the Ministry of Health has retained responsibility for oversight of the entire system;
local government owns and monitors health care institutions; and insurance funds deal with cash flows and insurance companies. However, the respective roles of the various players in planning, regulation and management has been obscured and the focus of the federal government on crisis management and systemic reform has left a leadership vacuum in many areas.
Planning
The Soviet model of central planning focused overwhelmingly on the allocation of capital, the pursuit of supra national ‘norms’ and the production of human resources. Planners relied on a formulaic approach which allowed historical incrementalism to dominate. The key building block was bed numbers, which were originally determined by population levels. Resources, both fiscal and human, then followed bed numbers.
Much of the thrust of development centred on the creation of additional institutions and the provision of extra beds. There was an adjustment of funding across regions to reflect variations in standardised mortality data, which conferred a greater degree of equity, but there was little response to local conditions. Nor did the system reflect international trends that saw increasing attention paid to primary care and preventive measures. The annual budget cycle produced clear short-term plans but these drew heavily on historical precedent and did not allow for strategic or innovative thinking. The presumption that things would continue very much as they had done in the previous year, together with the fact that this was indeed the case, meant that the mechanisms for implementing change remained underdeveloped.
The reform process has presented a major challenge to this approach to planning. The authority of central bodies to outline norms for the whole country has been rescinded and the various planning roles at a regional or local level have yet to be clearly assigned.
There is still a clear need for a national approach to public health issues yet the Ministry of Health funds little of the health care provision within the Russian Federation and thus has limited leverage. The Federal and Territorial Mandatory Health Insurance Funds might be expected to take on a priority setting role yet are not fully functional. Where
they are directing purchasing decisions at a branch level or guiding insurance companies they appear to be bound, to a significant extent, to the custom and practice which determined activity in the soviet era. Health departments in the oblasts, krais, autonomous regions and rayons still have a vested interest in capital and human resource planning which affect the facilities they own and the staff they are responsible for but tend to face severe economic constraints and to be uncertain about their new role. The relationships between these various bodies are tentative and the mechanisms whereby the agenda of any one player can influence the actions of another have yet to be fully defined.
These gaps in the framework for the transmission of authority appear to have encouraged an abdication of responsibility for planning even at the previous, rather mechanistic level. This tendency is exacerbated by the widely held perception that central planning is inherently authoritarian but, more significantly, is the result of the economic chaos experienced by disadvantaged regions. The Ministry of Health sets budget targets for oblast health expenditure but regions are frequently unable to raise sufficient moneys to comply because of local financial constraints. The legal requirement for local government to send proposed budgets to the Ministry for approval has been waived and there is little that central government can do to enforce spending guidelines. This undermines the Ministry’s stated aim of maintaining a basic package of health care across the whole Federation. It is clear that a degree of regional variation has entered the system which defies central target setting and conflicts with the concepts of effective planning and equity of health care provision.
The central state continues to collect data on health status through the activities of the San-Epid system. This might be expected to form the basis for the formulation of health care plans and indeed, has informed the setting of priorities centrally. However, the inequality between regions, in terms of their income generating potential and the structural inability of the system to fully address the imbalance in funding of TMHIFs in different regions imperils the ability of the health service to respond to the federal agenda. There is not, therefore, an effective national health plan. Neither are there clearly stated regional plans, nor is there a single body at the oblast level with responsibility for producing such plans. The division of funding, commissioning and provider activities is not supported by any formal coordinating mechanisms between TMHIFs, insurers and local government and responsibility for planning has fallen by the way side.
The assumption was that market mechanisms would ensure both the rational utilization of the resources available and an increasingly cost conscious approach to planning.
Financial incentives i.e. the potential to make efficiency savings from per capita allowances, were expected to encourage insurance companies to prioritize cost-effective care and set health targets locally. It was also envisaged that hospitals and polyclinics would refocus their own policies in response. Competition between insurance companies and providers was to maximize the benefits of the system while TMHIFs and health authorities were to discourage any abuses, as opposed to initiating policy development. However, in practice case payments have edged out per-capita allowances and budgets at all levels have been determined by wider financial constraints, rather than any independent measure of need. Competition between insurance companies has been confined to large cities. Much of the system is characterized by the presence of single providers and single insurers operating in conditions of monopoly and/or monopsomy and this has rendered the incentives to plan and refocus policy ineffective.
Furthermore, many areas feel profoundly threatened by economic conditions and the prevailing uncertainty and this has undermined their attempts to set priorities or develop meaningful plans. The legal duty of insurance funds to cover the basic package and the cost of the comprehensive bundle of care they must guarantee has stretched resources in many areas. It is common therefore, for both purchasers and providers to take a short term view and to focus on meeting immediate need rather than attempting strategic
planning. The scope for redefining approaches to care provision is highly constrained even in those areas which are economically stable.
Even the previous ability to plan bed and staff numbers has been compromised by financial constraints, which have led to cuts being made in response to economic factors rather than as part of a rational review of development. Given the over capacity of the soviet system this has yet to seriously undermine the health care delivery system but it does bode ill for future attempts to plan.
The production of doctors and nurses are still the subject of forecasting carried out by the Ministry of Health at a federal level. Efforts are made to calculate the number of medical and nursing staff that will be required to maintain given levels of services. The figures produced take into consideration the age profile of those in post, their distribution across specialities and the expected attrition rate. However, these cannot be said to constitute meaningful human resource plans because access to regional medical and nursing schools is not tightly controlled and because local governments (the main employers of health service staff), on occasion, close facilities and make staff redundant with little warning. None of the certainties of the soviet era, whether of the ratio of doctors to beds or nurses to population, remain intact and there is no planning response that can accommodate the vagaries of current practice.
At the moment there is little perceived need to invest in new hospitals or clinics but there is considerable demand for moneys for equipment and for repairs to existing buildings. Capital allocations, are in the main, included within the per capita allocation made to insurance companies. They, in turn, are expected to include a component in case-payments to hospitals and polyclincs to cover maintenance and recurrent expenditure. It is also expected that providers apply to insurance companies for grants for the acquisition of equipment and diagnostic tools. Only major investments are to be funded from federal budgets and these are to be determined on the basis on need and equity.
In practice, where investment is taking place, it is funded by local government. Rostov oblast financed the opening of a remote nephrolithotripsy laboratory and equipped a resuscitation center and outreach teams. In Murmansk oblast ultrasound, endoscopy and laprascopic equipment have been procured for all central rayon and central city hospitals. However, there has been little attempt to integrate these acquisitions into a national policy nor do they contribute to any coherent local plan. Rather these acquisitions seem to reflect the fact that certain oblasts have surplus funds and are disposed to make one off purchases for the health sector. In contrast, many regions report a complete interruption of investment. Kursk oblast has closed 14 of 63 district hospitals and has seen the primary sector devastated. There have been no capital inputs nor is there a capital expenditure plan. In Yaroslav there was insufficient funding to meet more than 60% of in-patients’ nutritional requirements, while in Saratov hospitals could not afford bandages35, let alone new equipment. Attempts to link capital allocation to utilization rates through insurance companies’ case payments have failed.
Instead the role of local government as the provider of capital continues, but without the constraints or regulation that operated in the soviet era.
It is the rapid shift to regional autonomy, above all else, that has undermined planning efforts. The impact of decentralisation has been to exacerbate inequalities between regions and to undermine attempts to plan capital expenditure or human resources rationally. Some oblasts are developing explicit decision-making mechanisms, but many more are making significant choices on a purely ad hoc basis and often in response to overwhelming financial pressure. It is clear that many areas lack both the financial and the human resources to take on the burden of policy making and priority setting. Nor are there adequate mechanisms to ensure any plans made are translated into action.
35Dr V.E. Tchernjavsky; Some Regional Examples of Health Care Reforms in Russia, 1996
The culture and the skills base in the oblasts is not sufficient to the tasks previously carried out centrally and the Ministry of Health is unable to offer the support needed.
Given these constraints many areas have fallen back on ‘historical precedents’
established under the command economy and show few signs of developing a new or rational approach to planning. Implementation also appears to be very much hit and miss except in those areas privileged in financial terms or in human resources. It is unclear how the more disadvantaged oblasts will cope in the absence of federal guidance as the situation becomes increasingly stretched and as the previous models of decision- making become ever more irrelevant.
Regulation
Regulation has also been affected by the shift of authority from the centre and the breakdown of some of the regulatory mechanisms of the soviet era. Before 1991 the All Soviet Ministry of Health was ultimately responsible for the regulation of pharmaceuticals, medical technology, standards of medical staff and medical institutions and the supply and training of doctors and nurses. Typically policy and standards were set centrally and the republican level Ministries of Health held responsibility for enforcement within their own territories. They in turn looked to oblast and rayon health committees to monitor and implement standards at the more local level. The San-Epid network also played an important part in reviewing sanitary and environmental conditions and enforcing hygiene regulations.
Decentralisation means that regulatory powers have been devolved to a significant degree. The Ministry of Health continues to play an important part in setting policy at a federal level but it no longer has the authority to intervene in the interpretation of standards locally. Rather increasing responsibility has been placed on the health departments or committees of local authorities as the enforcers of national guidelines with Mandatory Health Insurance Funds expected to play a lesser role in demanding that quality criteria be met36. The fact that health care facilities are owned by the local government authorities themselves is not regarded as creating any significant conflict of interests in terms of regulation.
The ability of health departments to fulfil their role appears to vary significantly across regions and in accordance with the resources and skills at their disposal. In those areas that are struggling to maintain a basic service monitoring and regulation appear to have been crowded out. Although no statutory regulatory powers were vested in territorial and branch insurance funds, where they enter into contracts with providers they are expected to stipulate the quality of care required. Market forces, (in particular the ability of third party payers to take their custom elsewhere), were expected to ensure that hospitals and clinics complied with these criteria. However, the lack of competition between providers undermines the ability of insurance funds to exert influence on standards.
The San-Epid network continues to play a national role in regulation and to report to the federal Ministry of Health. It has powers to enforce legislation relating to hygiene and sanitary conditions and environmental health issues. It appears that the inspection of facilities and the monitoring of matters within the network’s jurisdiction continues despite the changes that have taken place. However, the ability to impose compliance with standards has been compromised.
Pharmaceuticals are subject to regulation at various points in the chain of supply. The manufacture of pharmaceuticals is under the auspices of the federal Ministry of Health which licenses production and the San-Epid network who are responsible for ensuring that production
36 Territorial and branch insurance funds are regulated by the Federal Mandatory Health Insurance Fund which has national responsibility for purchasing authorities.
